Credit can be a powerful tool to achieve your financial goals; from personal loans to acquire goods or services that you cannot pay in cash to mortgage loans or to start a business.
However, without proper planning or analysis, a credit can be very expensive. Whether you apply for a credit card or apply for a personal loan, these are the three most important things you should take into account before doing so:
How much it will cost you, really?
One thing is that you request an amount, but another totally different is what you will end up paying. To find out how much a loan will cost you, check the CAT (Total Annual Cost). This number includes the costs and expenses that a credit entails. Take into account that the higher it is, the more expensive the credit will be.
Other factors to take into account are the additional costs, fees and commissions, so that you really know how much the loan will cost you and thus be able to compare or decide whether it is worth borrowing or not. In addition to time. Remember that the longer the term, the more you will pay and of course the most advisable thing is to look for a loan that has the lowest possible cancellation fees, in case you get extra money and want to pay off the capital sooner.
Can you afford it?
Do not forget to check your ability to pay to keep everything under control. Calculating your ability to pay is very simple, you just have to subtract all your fixed and variable expenses of the month from your monthly income along with the amount you spend on savings; And what you have left is what you can use to pay a credit or debt month by month.
Some experts suggest that a loan or credit should not exceed 30% of your income to be payable and not leave you in poor financial condition. Because remember that if you fall into arrears, this can affect your credit history and that you can reapply for a loan in the future.
Sometimes we think we need a micro loan to get out of an emergency or an additional credit card or to extend the limit of it. However, it is best to buy the different financial products. Nowadays and thanks to the online tools, we have the option of buying the products of different financial institutions to find the one that best suits our needs. You don’t need to marry your bank or an idea, always research and compare.
Finally, before signing any contract or saying “yes”, always remember to ask or review the following:
- The interest rate especially if it is fixed or varies during the term of the credit.
- Credit time
- What costs you must bear when applying for the loan.
- The initial credit conditions may be modified at some time.
- A promissory note must be signed or guaranteed.
- Advance payments can be made to the debt.
- What happens if you incur default: limits (30, 60 or 90 days) before you are transferred to a collection company; they charge you legal costs, where you make your payment of these fees and how they are distributed in the credit, etc.
We can help you reach your financial goals and objectives easily and safely. Come to us to know more information and request a loan to suit you.